EXPERT ADVICE 10 MOST IMPORTANT TAX CHANGES IN POLAND IN 2019 - Roedl.com

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EXPERT ADVICE 10 MOST IMPORTANT TAX CHANGES IN POLAND IN 2019 - Roedl.com
EXPERT
ADVICE
 10 MOST IMPORTANT TAX
 CHANGES IN POLAND IN 2019

                       Date of issue: 13.12.2018 r.
EXPERT ADVICE 10 MOST IMPORTANT TAX CHANGES IN POLAND IN 2019 - Roedl.com
Dear Enterprise Owners,

2019 will bring significant changes in tax law. To show you the scope and
diversity of the changes, we discuss the ten most important ones which will
affect businesses, or those which, if not complied with, may put you at risk
of particularly severe consequences and additional obligations.

With these changes the lawmakers want to tighten up the tax system but
they also introduce new tax reliefs. In addition to basic information on par-
ticular regulations, this brochure discusses their ramifications.

We discuss, among other things, issues related to reporting tax avoidance
solutions, tax reliefs for enterprises, changes in accounting for: transfer
pricing, company car expenses, tax-deductible costs, withholding tax on
dividends and royalties. We compare the new regulations with the old ones
and illustrate them with examples.

This brochure presents in an accessible way changes which the lawmak-
ers will or plan to introduce in 2019. If you are interested in further details,
please contact our experts in Cracow, Gdansk, Gliwice, Poznan, Warsaw
and Wroclaw.

Rödl & Partner
EXPERT ADVICE 10 MOST IMPORTANT TAX CHANGES IN POLAND IN 2019 - Roedl.com
Contents
    1. Mandatory Disclosure Rules                4
    2. Company cars – expense accounting         5
   3. Innovation box
   		 – tax relief for innovations               7
    4.   Exit tax – tax on income from
   		    unrealised gains	                        8
    5.   Withholding tax on dividends
   		    and royalties, and copies of
   		    certificates of residence                9
    6.   Changes in transfer pricing obligations 11
    7.   Simplified tax records to be kept
   		    by permanent establishments
   		    of non-residents                       12
    8.   Notional tax-deductible expenses       13
    9.   Taxation of cryptocurrencies           14
   10.   9% CIT rate                            15
EXPERT ADVICE 10 MOST IMPORTANT TAX CHANGES IN POLAND IN 2019 - Roedl.com
01                                  MANDATORY DISCLOSURE RULES

IN BRIEF

Mandatory Disclosure Rules (MDR) apply above all to those who develop tax planning schemes and make them
available to or support enterprises in their implementation (e.g. tax advisers, attorneys-at-law, employees of
financial institutions). The MDR apply to both cross-border and domestic transactions.

IN DETAIL                                                       CONSEQUENCES FOR TAXABLE PERSONS

The MDR apply to tax planning schemes which may sug-            Under the amended legislation taxable persons are obliged
gest an attempt to evade taxation, e.g.                         to report to tax authorities important information on the
–– acquisition of a loss-making enterprise to use the loss-     planned business operations (e.g. identification data of
   es to reduce tax liabilities,                                the taxable person and the person preparing a tax plan-
–– using tax credits or tax reliefs for the same transaction    ning scheme, EU Member States which may be involved in
   in at least two countries,                                   the scheme, a detailed description of arrangements, the
–– reclassification of income/revenue which actually leads      intended purpose of the scheme).
   to tax reduction, exemption or exclusion.
                                                                Furthermore, the mandatory disclosure violates the profes-
                                                                sional privilege – the promoter who has not been released
                                                                from the privilege must inform the user about his obliga-
ENTITIES OBLIGED TO REPORT:                                     tion to make the disclosure to the Head of the National
                                                                Tax Administration (NTA) and, at the same time, inform the
–– promoter (e.g. tax adviser, attorney-at-law, legal advis-    Head of the NTA that there is an entity subject to MDR.
   er),
–– user (an entity to which a tax scheme is provided,
   which implements the scheme or which is ready to im-
   plement the scheme, or which has taken steps aimed
   at implementing the scheme).

REMEMBER                             EXPERT’S OPINION
The MDR apply to                     The basic hallmark which determines the disclosure obligation is the main benefit cri-
arrangements in which                terion. It is considered fulfilled if the facts and circumstances indicate that an entity
the first transaction was            acting reasonably and driven by legitimate goals other than gaining financial bene-
effected after 25 June 2018.         fits could have reasonably selected a different course of action which would not have
                                     brought tax benefits to the entity.

                                     With such a general definition of the main benefit criterion each transaction that will
                                     reduce the taxable base despite being lawful will be reportable (e.g. a transformation of
                                     a limited liability company into a limited partnership – an attempt to separate an organ-
                                     ised part of the enterprise before the disposal of assets).

4
EXPERT ADVICE 10 MOST IMPORTANT TAX CHANGES IN POLAND IN 2019 - Roedl.com
02                                                    COMPANY CARS
                                                      – EXPENSE ACCOUNTING

IN BRIEF

The changes to be effective from the beginning of 2019 establish the rules of tax-deductibility of the costs of
purchase and use of cars and, additionally, in the case of company cars used for mixed purposes – adapt the
regulations as much as possible to the current VAT Act.

IN DETAIL                                                                                     –– cars included in company’s assets and used for mixed
                                                                                                 purposes:
The lawmakers have developed separate regulations for
cars included in company’s assets in the meaning of tax                                                     NOW                                   SOON
laws and used:
–– only for business purposes,                                                                –– 100% of car running costs are    –– 75% of car running costs are
–– for „mixed” purposes,                                                                         tax-deductible.                     tax-deductible (mind the VAT*)
as well as for private cars used also for business purposes.

                                                                                              –– cars owned by the taxable person and not included in
                                                                                                 tangible assets, but used for taxable person’s business
                                                                                                 purposes:

New restrictions on tax-deductibility of car running
                                                                                                       NOW (PIT, CIT)                       SOON (PIT)
expenses:
–– cars included in tangible assets and used for business                                     –– Within the limit under the       –– 20% of car running costs,
   purposes only:                                                                                mileage logbook: the product        including the insurance
                                                                                                 of the actual number of             premium, are tax-deductible
                   NOW                                           SOON                            kilometres driven for business      (mind the VAT*).
                                                                                                 and the rate for 1 km.           –– Vehicle mileage logbook not
 –– 100% of car running costs are             –– 100% of car running costs are                –– Vehicle mileage logbook             obligatory.
    tax-deductible.                              tax-deductible and                              obligatory.
                                                                                                                                            SOON (CIT)
                                              –– obligatory mileage logbook, like
                                                 for VAT purposes.                                                                –– 75% of car running costs are
                                                                                                                                     tax-deductible (mind the VAT*)

*the limits are inclusive of VAT which pursuant to Article 86a(1) VAT Act is not input tax,
and input VAT in the part in which the taxable person is not entitled to reduce VAT or
to obtain the refund of the difference in VAT.

REMEMBER
Your choice of the intended car use in business triggers consequences under income tax legislation and the VAT Act.

                                                                                                                                                          5
EXPERT ADVICE 10 MOST IMPORTANT TAX CHANGES IN POLAND IN 2019 - Roedl.com
02                                                    COMPANY CARS
                                                      – EXPENSE ACCOUNTING

–– with regard to tax-deductibility of fees under lease, rental                               –– with regard to the increase in the tax-deductible amount
   or similar agreements – regardless of the purpose for which                                   of depreciation charges of cars included in assets:
   the car is used:

                  NOW                                         SOON                                           NOW                                  SOON

Currently the lease instalment               Lease instalments are                            In the part calculated from the car   In the part calculated from the car
is tax-deductible in full (with              tax-deductible in the amount                     value, not exceeding:                 value, not exceeding:
the exception of financial lease             not exceeding their portion                      –– EUR 30,000 – for electric cars,    –– PLN 225,000 – for electric
instalment).                                 calculated pro rata to the                       –– EUR 20,000 – other                     cars,
                                             proportion between PLN 150,000                                                         –– PLN 150,000 - other
                                             and the value of the leased car
                                             (mind the VAT*).
                                             In case of electric cars the limit
                                             is PLN 225,000.

                                             Lease agreements concluded
                                             before the amended laws entered
                                                                                              –– with regard to the increase in the tax-deductible
                                             into force – option to follow the
                                                                                                 amount of car insurance premiums:
                                             current laws.

                                                                                                             NOW                                  SOON

                                                                                              Car insurance premiums in the         Car insurance premiums in the
                                                                                              amount not exceeding their            amount not exceeding the part
                                                                                              part calculated pro rata to the       calculated in the proportion
                                                                                              proportion between EUR 20,000         between PLN 150,000 and the
                                                                                              and the car value taken for           car value taken for insurance
                                                                                              insurance purposes.                   purposes.

*the limits are inclusive of VAT which pursuant to Article 86a(1) VAT Act is not input tax,
and input VAT in the part in which the taxable person is not entitled to reduce VAT or
to obtain the refund of the difference in VAT.

EXPERT’S OPINION
The changes will significantly increase the tax burden – they will limit the tax-deductibility of car use expenses.

                                                                                                                                                             6
EXPERT ADVICE 10 MOST IMPORTANT TAX CHANGES IN POLAND IN 2019 - Roedl.com
03                                    INNOVATION BOX
                                      – TAX RELIEF FOR INNOVATIONS

IN BRIEF

Innovation Box (also known as Patent Box, Intellectual Property Box or IP Box) is meant to be a tax incentive
for Polish and foreign enterprises to carry out R&D work in Poland and commercialise its results. Starting from
January 2019, income generated from innovative and patented solutions created, developed or improved by
enterprises are taxable at a preferential rate of 5% (instead of 19%).

IN DETAIL                                                         3. the eligible intellectual property right included in the
                                                                     selling price of the product or service,
Innovation Box will be available both to natural persons
and legal persons that develop and commercialise so-cal-          4. compensation for the violation of rights arising from
led eligible intellectual property rights (patents, utility mo-      the eligible intellectual property right.
dels, industrial designs and software) which are protected
by the applicable domestic or international laws.
                                                                                 NOW                                 SOON

The income taxable at the preferential rate of 5% will be          An R&D tax relief has been           Starting from 2019, two reliefs
determined as a product of the income earned from the              available in Poland since 2016. It   will be available in Poland to
eligible intellectual property right in the fiscal year and the    allows deducting tax-deductible      support innovative activity: the
Nexus mathematical rate.                                           costs incurred for R&D work          R&D relief (on the existing terms
                                                                   from the taxable base (which, in     and conditions) and Innovation
Income earned from the eligible intellectual property right        simplified terms, is income).        Box which enterprises will
means income earned from:                                          Under the R&D relief the             use at the stage of taxation
                                                                   enterprise obtains support only at   of the income derived from
1. fees and charges under the licence agreement,                   the stage of development of the      the commercialisation of the
                                                                   new solutions.                       new solutions. Innovation Box
2. the sale of the eligible intellectual property right,                                                complements the R&D relief.

REMEMBER                                                                       EXPERT’S OPINION
To be eligible for the relief, the taxable person must meet two                Innovation Box is a great complement to the ex-
conditions:                                                                    isting tool, i.e. the R&D relief. The former tool (IP
                                                                               Box) deals with the revenue, whereas the latter
1. carry out R&D activity directly related to creating, commercialising,       tool – with the costs, which after joining the two
   developing or improving an asset in the form of intellectual                together may turn out to be the solution for pro-
   property right, and                                                         moting and supporting innovation in Poland.

2. keep accounting records separated so that it is possible to
   calculate the taxable base.

Innovation Box will be cleared in the annual PIT or CIT return and
the taxable person will be entitled to apply the relief throughout the
intellectual property right‘s protection period.

7
EXPERT ADVICE 10 MOST IMPORTANT TAX CHANGES IN POLAND IN 2019 - Roedl.com
04                                         EXIT TAX
                                           – TAX ON INCOME FROM
                                           UNREALISED GAINS

IN BRIEF

Exit tax is applicable to income from unrealised capital gains if a taxable person transfers its assets to another
country. The PIT Act and CIT Act have been amended to adjust Polish tax laws to changes in the EU law intro-
duced in 2016 (the so-called Anti-Tax Avoidance Directive or ATAD).

                                                                           EXIT TAX IS APPLICABLE TO:
IN DETAIL
                                                                           –– enterprises,
If the tax-deductible costs of sale of an asset are not dis-
                                                                           –– sole proprietors,
closed for the purposes of income tax, the value of an as-
                                                                           –– natural persons who do not pursue any business activity.
set for tax purposes will not be determined.
                                                                           Exit tax is chargeable on:
                              PIT RATE
                                                                           –– the transfer of assets from the head office to the per-
19% of the taxable base if the       3% of the taxable base if the value      manent establishment in another Member State or a third
value of asset for tax purposes is   of asset for tax purposes is not         state,
determined                           determined
                                                                           –– the transfer of assets from a permanent establishment in
                                                                              a Member State to the head office or another permanent
                              CIT RATE
                                                                              establishment in another Member State or a third state,
Taxable base of 19%. Income from unrealised gains means an excess
of the market value of the asset over the value of the asset for tax       –– changing the tax residence to another Member State or
purposes.                                                                     a third country (except for assets which remain actually
                                                                              connected with the permanent establishment in the first
                                                                              Member State),

                                                                           –– relocating the business activity conducted through a
                                                                              foreign permanent establishment located in Poland to
                                                                              another Member State or a third state.

                                                                                          NOW                               SOON

                                                                            Unrealised gains are not subject   Unrealised gains taxable with
                                                                            to taxation.                       both PIT and CIT.

REMEMBER                                                                    EXPERT’S OPINION
Exit tax and CIT:                                                           After the introduction of exit tax to the Polish tax sys-
–– You have 7 days of the end of the month in which the                     tem, any plan to move an asset outside the country
   income from unrealised gains is earned to file the re-                   will require an additional economic analysis. This new
   levant tax return and to pay the tax.                                    legal reality will also affect tax planning before starting
                                                                            a business activity.
Exit tax and PIT:
–– You have 7 days of the end of the month in which the
   total market value of the transferred assets exceeds
   PLN 4 million to file the return and pay the tax.

                                                                                                                                       8
EXPERT ADVICE 10 MOST IMPORTANT TAX CHANGES IN POLAND IN 2019 - Roedl.com
05                                   WITHHOLDING TAX ON DIVIDENDS
                                     AND ROYALTIES AND COPIES
                                     OF CERTIFICATES OF RESIDENCE

IN BRIEF

If a foreign taxable person wants to enjoy preferential tax rates under the relevant tax treaty, he has to present
his certificate of residence to the Polish business partner. Until the end of 2018 the original certificate was re-
quired. Starting from 2019, it will be possible to enjoy the preferential tax rates under tax treaties on the basis
of a copy of the certificate of residence.

IN DETAIL                                                        Pursuant to the PIT and CIT Acts, this applies in particular to:

Nonetheless, such an option will be significantly limited        –– royalties in the form of copyrights, industrial property
and will be available only with reference to fees for the fol-      rights and know-how,
lowing services: consultancy, bookkeeping, market rese-
arch, legal services, advertising, management and control,       –– fees for performing arts, entertainment or sports
data processing, recruitment of employees and personnel             activities,
acquisition, guarantees and warranties, and other services
of similar nature.                                               –– fees for the following services: consultancy, book-
                                                                    keeping, market research, legal services, advertising,
The usability of the copy of the certificate will also be li-       management and control, data processing, recruitment
mited – it will be accepted if the following two conditions         of employees and personnel acquisition, guarantees
are met jointly:                                                    and warranties and other services of similar nature.

–– the total payments to the same entity does not exceed
   PLN 10,000 per calendar year,
                                                                 The rules for taxation of royalties vary by tax treaties.
–– information following from the copy of the certificate        Examples of the variations:
   of residence does not raise reasonable doubts as to its       –– a maximum tax rate which the contracting state can
   accuracy.                                                        apply to royalties paid to the residents of the other con-
                                                                    tracting state,

                                                                 –– a definition of royalties which is different from that in
A Polish entity which pays interest, royalties and fees for         the domestic law. In the tax treaties to which Poland is a
intangible services to a non-resident must deduct the               party the definitions of royalties are narrower than in the
withholding tax and pay it to the tax office.                       domestic law.

REMEMBER                                                         EXPERT’S OPINION
The PLN 10,000 limit up to which a copy of the                   The acceptability of copies of the certificate of residence is
certificate of residence is acceptable is about the              a step in the right direction. However, due to the threshold
payments made in the fiscal year to the same entity.             amount (and, in particular, the obligation to calculate the
                                                                 aggregate amount of the fees in a fiscal year) many taxable
                                                                 persons will still have to obtain the original certificates of
                                                                 residence from their customers.

9
EXPERT ADVICE 10 MOST IMPORTANT TAX CHANGES IN POLAND IN 2019 - Roedl.com
05                                  WITHHOLDING TAX ON DIVIDENDS
                                    AND ROYALTIES AND COPIES
                                    OF CERTIFICATES OF RESIDENCE

IN BRIEF

The amended CIT Act changes the rules of charging the withholding tax on dividends, interest, royalties and
fees for certain types of intangible services. It applies to withholding agents who make the above payments to
the same taxable person to the total higher than PLN 2 million in a fiscal year. After exceeding that limit, the
withholding agents will be generally obliged to deduct withholding tax at the rate specified in the CIT Act.

IN DETAIL                                                       If the tax is charged on the excess over PLN 2 million, the
                                                                withholding agent or the taxable person will have the right
This means that after exceeding the PLN 2 million thre-         to apply for its refund. The decision on the refund will be
shold, withholding agents will no longer be entitled to the     preceded by evidence proceedings. The tax should be re-
withholding tax exemptions and the preferential rates pro-      funded without undue delay, no later than within 6 months
vided for in tax treaties. However, the demise of the above-    of receiving the application for tax refund. That deadline
-mentioned preferential treatment will not be absolute – to     can be extended if it is necessary to examine the grounds
maintain the exemption (or the right to apply preferential      for the refund.
tax rates specified in the tax treaty, as the case may be):

–– the withholding agent will have to perform an additio-
   nal verification to confirm eligibility for the exemption
   or the preferential rates, and file the relevant statement
   to the head of the tax office,

–– it will be necessary to obtain a confirmation that the
   withholding agent is exempt from deducting flat inco-
   me tax (the relevant application can be submitted by
   the withholding agent or by the taxable person; the fee
   for the confirmation is PLN 2,000).

REMEMBER                                                         EXPERT’S OPINION
The PLN 2 million limit which if exceeded triggers               The changes concerning the withholding tax should defi-
restrictions is on payments made in the fiscal year to the       nitely be considered negative as they impose additional
same taxable person. This means that e.g. dividends and          obligations on enterprises.
loan interest paid to the same entity add up.

                                                                                                                   10
06                                    CHANGES IN TRANSFER PRICING
                                      OBLIGATIONS

IN BRIEF

Changes in transfer pricing starting from 2019:
–– reduce the documentation obligations,
–– extend deadlines,
–– introduce additional simplifications and documentation exemptions.

The most important changes:                                       5. New rules of accounting for certain transactions:
1. Standardised terms and definitions:                               –– the arm‘s length principle revised,
   –– the laws currently in force repealed and new chapters          –– special rules for low value-added services,
      regulating transfer pricing issues introduced to the           –– special rules for loans,
      PIT and CIT Acts.                                              –– option to apply, in justified cases, other price
                                                                        calculation methods than those provided in the act,
2. Documentation requirements harmonised with OECD                   –– transfer pricing adjustments possible.
   standards.
                                                                  6. New deadlines:
3. Less obligations:                                                 –– the deadline for submitting a statement saying
   –– documentation thresholds increased to PLN 10                      that the transfer pricing documentation has been
      million (for transactions on goods and for financial              prepared and information on transfer pricing
      transactions) and to PLN 2 million (for services and              extended from 3 to 9 months after the fiscal year-
      other transactions),                                              end,
   –– Master File documentation threshold increased to PLN           –– the deadline for preparing the Master File extended
      200 million (consolidated revenues for Master File                to 12 months after the year-end.
      documentation purposes),
   –– obligation to prepare the Master File limited to entities                     NOW                                    SOON
      subject to full or proportional consolidation,
                                                                   Benchmarking study to be prepared       Benchmarking study will be an
   –– the Master File prepared by another entity is acceptable     only by entities with revenues or       obligatory component of the Local File.
      (provided that it complies with Polish law). English         expenses exceeding EUR 10 million
      version of the Master File will also be accepted.            Transfer pricing documentation to be    Documentation obligation will depend
      However, tax authorities may request a Polish version        prepared by entities with revenues or   on exceeding the new thresholds.
      within 30 days,                                              expenses exceeding EUR 2 million

   –– CIT/TP summary report replaced with transfer                 Three-tiered transfer pricing           Two-tiered transfer pricing
                                                                   documentation (Local File,              documentation (Local File, Master
      pricing report in electronic form (TP-R form), which is      benchmarking study, Master File)        File)
      generally supposed to be easier and more intuitive.
                                                                                                           Obligation to submit a statement
                                                                   Obligation to submit a statement        saying that the transfer pricing docu-
4. Additional exemptions from the documentation                    saying that the transfer pricing        mentation has been prepared and that
   obligation for certain transactions.                            documentation has been prepared         the terms and conditions of the con-
                                                                                                           trolled transactions are at arm’s length

                                                                                                           Information on transfer pricing submit-
                                                                   CIT/TP report submitted by entities
                                                                                                           ted in electronic form by every entity
                                                                   with revenues or expenses exceeding
                                                                                                           obliged to prepare transfer pricing
                                                                   EUR 10 million
                                                                                                           documentation

REMEMBER                                                 EXPERT’S OPINION
The new regulations enter into force on 1 January        By introducing the proposed changes the lawmakers want to reduce
2019 and will be applicable to transactions              the number of entities obliged to prepare the documentation and to
concluded from the beginning of 2019. As                 reduce the number of controlled transactions.
regards transactions made in 2018, taxable
persons will need to prepare the related                 With the extended deadlines for preparing the documentation, tax-
documentation until the end of September 2019,           able persons will manage their transfer pricing obligations more ef-
in accordance with the old regulations.                  fectively.

 11
07                                  SIMPLIFIED TAX RECORDS TO BE KEPT
                                    BY PERMANENT ESTABLISHMENTS OF
                                    NON-RESIDENTS

IN BRIEF

The lawmakers have decided to give the Minster of Finance in the CIT Act the right to determine, by way of a
regulation, the extent of records to be kept by permanent establishments of non-residents operating in Poland.
There are no implementing regulations yet but the draft act stipulates that the records should follow the sim-
plified model.

IN DETAIL                                                      REMEMBER
The new rules will apply to the taxable persons who have       The lawmakers have not prepared the implementing re-
permanent establishments in Poland and do not open             gulations to the discussed provision yet. As soon as the
branch offices or representative offices in Poland to pur-     finance minister defines the relevant requirements in a re-
sue a business activity. Under the right given to him in the   gulation, we recommend reviewing your records kept so far
act, the minister competent for public finance will deter-     and adjusting them to the requirements.
mine the method of keeping the simplified records and the
requirements that they should meet to enable correct cal-
culation of the due tax.

EXPERT’S OPINION
The new rules under which permanent establishments can keep simplified records seem good. They will help clear many
doubts about how to document the revenues and expenses of permanent establishments. At the same time, the new rules
confirm that a taxable person who operates through a permanent establishment is not obliged to keep comprehensive books
of account according to the Accounting Act. Nonetheless, an unambiguous assessment of the amended laws will be possible
only after reviewing the implementing regulations, which are not ready yet.

                                                                                                                  12
08                                   NOTIONAL TAX-DEDUCTIBLE
                                     EXPENSES

IN BRIEF

A company will have the right to deduct notional interest rate which it would include in tax-deductible expens-
es if it procured financing from outside. The new concept in CIT is supposed to act as an incentive for taxable
persons to retain the capital in the company for its development.

IN DETAIL
                                                                                NOW                                  SOON

The Ministry of Finance believes that this change evens out      Nowadays, most taxable persons        Taxable persons will have a right to
the tax incentives related to external financing with creat-     find it more beneficial to finance    include an equivalent of the debt
ing self-financing capital. The lawmakers assume that the        their operations with debt capital    financing costs in tax-deductible
adjustment will be full up to the amount of retained earnings/   as they can deduct e.g. loan          expenses even though the costs
made contributions on which the notional interest (calculated    interest from tax.                    will not actually be incurred.
at the reference rate of the National Bank of Poland increased
by 1 percentage point) does not exceed PLN 250,000.              Lawmakers do not promote taxable
                                                                 persons’ self-financing in any way.

REMEMBER                                                         EXPERT’S OPINION
The lawmakers want the new regulations on tax-                   The proposed changes are favourable to taxable persons.
deductibility of notional interest on retained earnings or       Due to the limit introduced in January 2018, which restricts
on contributions made to apply for the first time to the         the tax-deductibility of debt financing costs, enterprises
fiscal year commencing after 1 January 2020. However,            find loans less and less attractive.
it will also be possible to apply this solution to the profit
appropriated to capital reserves or to contributions made        The option to deduct notional interest should be considered
to the company after 31 December 2018, provided that             in conjunction with the last year’s restriction on the tax de-
the money is considered to be appropriated and the               ductibility of debt financing costs – the legislators limit the
contributions made in the fiscal year commencing after           benefits of external financing and, at the same time, pro-
31 December 2019.                                                mote self-financing derived from additional contributions or
                                                                 retained earnings.

13
09                                 TAXATION OF CRYPTOCURRENCIES

IN BRIEF

Due to the lack of relevant regulations, the income of persons trading in cryptocurrencies could be taxed at as
much as 32%. Therefore, businesses from this sector have moved their operations abroad. Starting from January
2019, revenues from trading in virtual currencies will be classified as capital gains (under PIT and CIT Acts). Gen-
erally, the income earned from the sale of virtual currencies will be taxable at 19%.

IN DETAIL                                                     The following documented costs and expenses will
                                                              be tax-deductible costs of selling virtual currency:
In the opinion of tax authorities, revenue from the sale of   –– expenses incurred directly to purchase virtual currency,
virtual currency is revenue from property rights so in the       and
case of a sales contract or an exchange agreement 1%          –– costs of sale of virtual currency.
transfer tax is payable.

From 13 July 2018 to 30 June 2019 transfer tax will not be                   NOW                                   SOON
collected from taxable persons who purchase or exchange
cryptocurrencies.                                              Taxed like income from property       Taxed as:
                                                               rights:                               –– capital gains (PIT) at 19%,
                                                               –– according to tax brackets (18%     –– capital gains (CIT) at 19% or
                                                                   and 32%) – most PIT taxable          at a preferential rate of 15%
The new regulations apply to legal and natural persons            persons,                              (it may be reduced to 9% from
who sell virtual currency (cryptocurrency) – exchange vir-     –– at 19% – CIT taxable persons,         2019).
tual currency for a legal tender, merchandise, service or         PIT taxable persons using linear   Loss cannot be set off against
property right other than virtual currency or pay for other       tax.                               income from other business
liabilities with virtual currency.                             Loss on cryptocurrency can be         activity.
                                                               set off against income from other
                                                               business activity.

                                                                         UNCHANGED                               CHANGED

                                                               Taxable income from the sale          –– revenue source,
                                                               of virtual currency.                  –– tax rate,
                                                                                                     –– option to set off the loss.

REMEMBER                                      EXPERT’S OPINION
Transfer tax exemption applies                The introduction of laws regulating the taxation of cryptocurrencies should
until 30 June 2019.                           be assessed as positive because it clears out the doubts in this area.

                                                                                                                               14
10                                  9% CIT RATE

IN BRIEF

Starting from January 2019, the current preferential CIT rate of 15% will be reduced to 9%.

                                                                A taxable person starting his business may also apply the
IN DETAIL
                                                                9% CIT rate in his first tax year.
The lower rate applies to revenue other than capital gains,
                                                                Groups of companies may only use the basic 19% rate. The
that is to profits on operating activities.
                                                                restriction applies also to entities which have undergone
                                                                restructuring processes described in detail in the CIT Act.
Although the tax rate has been reduced, eventually the
                                                                The exception is the year of the restructuring and the year
lawmakers have not increased the sales revenue limit for
                                                                after that.
small taxpayers to EUR 2 million like they originally plan-
ned. Furthermore, the revenue amount taxable at 9% CIT
                                                                At the same time, please note that the 9% CIT rate applies
rate in the tax year has been limited to EUR 1.2 million.
                                                                to income of up to the PLN equivalent of EUR 1.2 million,
Once that limit is exceeded, the basic 19% rate of tax must
                                                                earned in a given tax year. Starting from the month (quar-
be applied. As a result, ultimately the entire revenue (inco-
                                                                ter) after exceeding that limit, the tax should be charged
me) earned in the tax year will be taxable at 19% CIT rate.
                                                                and paid at 19% CIT rate. The difference in the tax will be
                                                                payable after the end of the tax year.

The 9% tax rate will be available to small taxpayers me-
aning those whose sales revenues (including the VAT amo-
unt) did not exceed EUR 1.2 million in the preceding tax
year. This means that in 2019 a limit of PLN 5.135 million
will apply to revenue earned in 2018. From 1 January 2020,
the limit will be increased to EUR 2 million.

REMEMBER                                                        EXPERT’S OPINION
Small taxpayers or start-ups may apply the reduced CIT          The reduced rate will still apply to relatively small number
rate of 9% until the month (quarter) of the tax year in         of businesses – the rules of taxation for individuals running
which their sales revenue exceed the limit of EUR 1.2           small businesses will remain unchanged, and it is them who
million (equivalent in PLN). Once that limit is exceeded,       make the majority of small taxpayers.
the CIT advance is payable at 19%.

15
Contact persons

                   Aleksandra Galczak                             Agnieszka Szczotkowska
                   Tax Adviser (Poland)                           Tax Adviser (Poland)
                   aleksandra.galczak@roedl.com                   agnieszka.szczotkowska@roedl.com

                   Agnieszka Gliwińska                            Łukasz Szczygieł
                   Tax Adviser (Poland)                           Tax Adviser (Poland)
                   agnieszka.gliwinska@roedl.com                  lukasz.szczygiel@roedl.com

                   Michał Gosek                                   Dominika Tyczka
                   Tax Adviser (Poland)                           Tax Adviser (Poland)
                   michal.gosek@roedl.com                         dominika.tyczka@roedl.com

                   Ewelina Kołodziejska                           Daria Walkowiak
                   Consultant (Poland)                            Attorney-at-Law (Poland)
                   ewelina.kolodziejska@roedl.com                 daria.walkowiak@roedl.com

                   Aleksandra Łączna                              Maciej Wilczkiewicz
                   Tax Adviser (Poland)                           Tax Adviser (Poland)
                   aleksandra.laczna@roedl.com                    maciej.wilczkiewicz@roedl.com

                   Daria Staniszewska-Kloc                        Dawid Zwijacz
                   Tax Adviser (Poland)                           Attorney at Law (Poland)
                   daria.staniszewska-kloc@roedl.com              dawid.zwijacz@roedl.com

   al. Grunwaldzka 472B                      ul. Skałeczna 2               ul. Sienna 73
   80-309 Gdańsk                             31-065 Kraków                 00-833 Warszawa
   T +48 22 210 69 88                        T +48 12 378 66 00            T +48 22 696 28 00
   gdansk@roedl.com                          krakow@roedl.com              warszawa@roedl.com

   ul. Zygmunta Starego 26                   ul. Górki 7                   ul. św. Mikołaja 19
   44-100 Gliwice                            60-204 Poznań                 50-128 Wrocław
   T +48 32 330 12 00                        T +48 61 864 49 00            T +48 71 606 00 00
   gliwice@roedl.com                         poznan@roedl.com              wroclaw@roedl.com

  Editors: Barbara Klimek, Ewa Zapolna
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